Nautilus Minerals AGM: Deep Sea Mining company sinking in deep water

Published by MAC on 2018-06-26
Source: Press release

Nautilus Minerals AGM: Deep Sea Mining company sinking in deep water

Deep Sea Mining Campaign media release

25 August 2018

Nautilus Minerals once again faced challenges at its AGM in Vancouver today. As the financial crisis mounts Nautilus' dreams to undertake the world's first experimental deep sea mine, the Solwara 1 project in Papua New Guinea, look ever more distant. [1]

Nautilus has been hit hard by the divestment of Anglo American who announced their break with the company just before their own AGM in May this year.

Andy Whitmore of the Deep Sea Mining campaign stressed, “Anglo's decision to divest, on top of Nautilus's myriad problems, proves the company is running out of both credit and credibility. It is not just the company that is sinking, but the project – and the concept of deep sea mining itself – that is going down with it.”

Nautilus is now propped up by its two major shareholders - Russian mining company Metalloinvest and Omani conglomerate MB Holdings, both of whom are lending significant amounts of money in bridging loans at 8% interest. [2]

“Nautilus is increasingly controlled by these two entities, which in the case of Metalloinvest opens up serious worries that it could be hit by further US sanctions against Russian oligarchs.” continued Whitmore. [3]

“The company is in a parlous state with its finances. Even if Nautilus was to become bankrupt and someone else took over the project, they would face the same social and legal – let alone environmental – risks.”

“Nautilus is desperate for further funding. Noting it may not succeed the company has introduced cost saving measures including reducing its workforce and not entering into any new construction contracts.” [4]

The reluctance of investors was ascribed by a recent article to "the unknown feasibility of this type of activity and concern that they could potentially be deemed to be complicit in environmental degradation.” [5][6]

Growing local opposition in Papua New Guinea has seen communities come out in force at formal hearings to oppose the granting of Nautilus’s exploration licences and a legal challenge regarding Solwara 1 has been lodged. [7]

Jonathan Mesulam of Solwara Warriors noted “New Irelanders and communities across the Bismarck Sea call for a ban on deep sea mining. One needs only to look at the history of the civil war in Bougainville Island and the current civil unrest against the Exxon project in Hela and Southern Highlands Province to see how local communities react to projects that ignore their concerns." [8]

“Canadian mining companies have a shameful history of environmentally destructive mining in Papua New Guinea,” says Catherine Coumans of MiningWatch Canada, “but this project may prove to have the most widespread and irreversible impacts of all."

"No Canadian company or investors should want to be involved in this experimental destruction of the seabed and of rare hydrothermal vents.”

Nautilus Minerals start date for production has been pushed back to at least the third quarter of 2019, so any potential income will be absorbed by mounting loan interest payments and costs. Adding to their problems is the impounding of their production support vessel due to the lack of finance to complete it. [9]

For more info

UNITED KINGDOM
Andy Whitmore, Deep Sea Mining Campaign
whit@gn.apc.org

CANADA
Catherine Coumans, MiningWatch Canada
catherine@miningwatch.ca

PAPUA NEW GUINEA
Jonathan Mesulam, Alliance of Solwara Warriors
mesulamjonathan@gmail.com

--

NOTES

[1] If it proceeds the Solwara 1 mine will be located in the Bismarck Sea of Papua New Guinea, approximately 25 km from the coastline of New Ireland Province, about 35 km from Duke of York Islands and 60 km from Kokopo township in East New Britain.

[2] As at May 15, 2018, an amount of $11.25 million in bridge loans have been advanced to Nautilius and a total of 48,324,740 share purchase warrants have been issued to the major shareholders as partial consideration for such bridge loans. The loans bear interest at 8% per annum, payable bi-annually in arrears with a one year maturity date. See Nautilus statement at www.nautilusminerals.com/irm/PDF/2024_0/MDAfortheperiodendedMarch312018

[3] USM Holdings, the ultimate parent holding company of Metalloinvest Holding (Cyprus), is
controlled by Russian billionaires Alisher Usmanov (49%) and Vladimir Skoch (30%). In the 6 April sanctions imposed by the US, Vladimir Skoch's son was one of the seven Russian tycoons sanctioned, while David Kramer, a State Department official under President George W. Bush, said he was surprised by the exclusion of Alisher Usmanov. See https://www.bloomberg.com/news/articles/2018-04-11/deripaska-s-two-decade-wooing-of-u-s-ends-in-financial-meltdown and https://www.forbes.com/sites/angelauyeung/2018/04/06/u-s-treasury-department-announces-new-sanctions-against-7-russian-billionaires/#4ce07d243752

[4] See Nautilus statement at www.nautilusminerals.com/irm/PDF/2024_0/MDAfortheperiodendedMarch312018

[5] Canada’s Nautilus aiming to start marine mining in 2019 despite enviro concerns, Dylan Slater, Creamer Media's Mining Weekly, 1 June 2018 - http://www.miningweekly.com/print-version/canadas-nautilus-aiming-to-start-marine-mining-in-2019-despite-enviro-concerns-2018-06-01

[6] See also postings on the investor bulletin board Shareholders Unite - http://shareholdersunite.com/mybb/forumdisplay.php?fid=41 including quotes such as “So, many of us have been holding on to this stock for years now ... and hoping for the best. I've always felt generally positive about Solwara 1 and felt that eventually, they would pull a rabbit out of a hat. … However, I've never felt quite as down and out on this stock/company as I do right now.”

[7] Legal action launched over the Nautilus Solwara 1 Experimental Seabed Mine, statement 6 December 2017 - http://www.deepseaminingoutofourdepth.org/legal-action-launched-over-nautilus-solwara-1/

[8] Hela landowners vandalise gas project, block road in PNG, Radio New Zealand International, 19 June 2018, https://www.radionz.co.nz/international/pacific-news/359983/hela-landowners-vandalise-gas-project-block-road-in-png

[9] See Nautilus statement http://www.nautilusminerals.com/irm/PDF/2020_0/Nautilusreceivesadditionalbridgeloanandprovidescorporateupdate